I’m never sure what to think of Peggy Noonan. Sometimes she sounds more rational than the typical conservative columnist writing for The Wall Street Journal. Other times she comes up with nonsense like in today’s column bashing Obama over the BP oil spill. Naturally many conservative sites are lapping it up as it attacks Obama.

It is amusing to see writers who normally claim that the role of the federal government should be limited to the functions specifically listed in the Constitution now arguing that the ability to handle an oil spill is the way to measure a president’s competence. The same bloggers who whine that health care is not listed in the Constitution don’t care that oil spills are not mentioned either. Of course they are totally oblivious to how Republican deregulation and hiring of political cronies and industry shills as opposed to competent regulators contributed to this disaster as I noted yesterday.

If Noonan is going to judge the success of Obama’s presidency based upon this oil spill then she needs to review her own view after Katrina. Blue Texan provides this comparison:

The premise of Noonan’s moronic column is that the federal government, especially the president, should be capable of ending an oil-pipe rupture owned and operated by private companies, using technology that only deep-sea oil companies deploy or understand. And if such a technical issue is not resolved by government immediately, it reveals paralyzing presidential weakness and the failure of an entire branch of political philosophy. Again: seriously? It’s Obama‘s fault that under Bush and Cheney, government regulation of oil exploration was so poor and corrupt, corner cutting appears to have been routine? And this, Peggy, is what governments do, even when run by crazy-ass liberals. Governments do not dig for oil; they merely regulate those who dig for oil. That the government failed to do so under the previous administration does not seem to me to be proof that this administration has failed. (For a blast of common sense on this, see Clive.)

For Noonan, the American public is concerned only with spending, illegal immigration and the federal government’s inability to stop an oil leak. For Noonan, the steepest downturn since the 1930s never happened. For Noonan, the flaws of the healthcare system – like, er, millions have none – do not exist. For Noonan, the massive debt – almost all of which Obama either inherited or built in the emergency attempt to stabilize a global economy heading into an abyss – is evidence that government does not work and that Obama is incompetent. For Noonan, actual difficult practical tasks most adults understand are complex to grapple with – how to prevent a Second Great Depression, how to police thousands of miles of border, how to stop an oil leak deep in the ocean floor – are easy. Just do it. Or be labeled incompetent and doomed.

This is utterly unrelated to the reality I have witnessed these past two years, or the slow catastrophe of misgovernment that really did unfold in the last ten. Maybe that says as much about my cocoon as Noonan’s. But I doubt it. What I have also learned these past few years is that the right seeks merely a narrative to lead themselves out of the hole they dug for all of us. Reality be damned. The job of the rest of us is to insist that reality matters and that these fools be exposed.

1. Yes, there’s an obvious and substantial difference between Katrina and Deepwater Horizon. The first was a natural disaster that required a relief effort tailor-made for government intervention. The second is a man-made debacle, requiring specialized expertise to fix; expertise that apparently no one has, although BP seemingly has more than any other entity. Regardless, the current situation makes me more sympathetic to the Bush administration’s travails with the former situation. Both are complex undertakings and those of us who are not directly involved are too damn quick to judge. At least once, possibly more, I suggested the “incompetent” label for Bush, et. al., in the context of Katrina. Noonan does the same for Obama, et. al., in the context of Deepwater Horizon. Increasingly, I believe both characterizations are unfair.

2. In the midst of the Gulf crisis, the President has performed a Solomonesque move. He has ordered “a suspension of virtually all current and new offshore oil drilling activity pending a comprehensive safety review.” He has also balanced that decision with an unflinching commitment to the fact that we must embrace these ventures until petroleum can be more voluminously replaced as an energy source.

“It has to be part of an overall energy strategy,” Mr. Obama said. “I mean, we’re still years off and some technological breakthroughs away from being able to operate on purely a clean-energy grid. During that time, we’re going to be using oil. And to the extent that we’re using oil, it makes sense for us to develop our oil and natural gas resources here in the United States and not simply rely on imports.”

Given the Republicans’ drill-baby-drill mindset, shouldn’t they be leaping forward to praise this instance of Presidential discretion?

To be clear: I’m not suggesting the GOP should muffle all criticism. To the contrary: Pointed questions — from both sides of the aisle — are appropriate and necesary to the functioning of the Republic, even (especially) in times of crisis. But wrecklessly fanning the flames of criticism — and yes, I believe, Noonan and like-minded Republicans are being wreckless — is irresponsible and potentially detrimental to one of the GOP’s pet positions.

After the major failures of the Bush administration it has been common place for Bush apologists to try to claim that Obama has committed acts of incompetence comparable to those which were commonplace under Bush. On recent effort has been to try to label the BP oil spill Obama’s Katrina. Karl Rove claims this in an op-ed in The Wall Street Journal.

As Think Progress points out the most remarkable thing about this op-ed is that after years of defending the Bush administration’s approach to Katrina, Rove is now admitting that this was mishandled. There are major differences between the events. Obama didn’t ignore warnings even before the even occurred as Bush did with Katrina. The two events do have one key factor in common–both were related to the hiring of political cronies and industry shills as opposed to competent regulators during the Bush years. Think Progress notes:

Rove’s analysis would be sharper if he noted that “Obama’s Katrina” actually highlights some very real Bush and Cheney failures. By filling the Minerals Management Service — the government agency responsible for regulating off shore oil drilling — with industry shills who took drugs and had sex with the officials they were supposed to be policing, the Bush administration dangerously eroded the regulatory regime, and missed warnings that could have helped prevent the BP disaster.

If Obama deserves any blame it is for not having repaired all the damage which the Bush administration has done to this country in sixteen months.

There’s not much to say in terms of the economic issues, the real lesson is that politics is more constrained than many people think. Berating Obama for his lack of courage or his “failure to get tough” is simply denying or postponing this fundamental realization.

All policy recommendations need to be analyzed within this framework. How will your preferred policy (this includes deregulation and the like, by the way; I am not aiming this barb in any particular direction) play out when, in the middle of the action, government turns out to be extremely constrained in a way you do not like.

James Carville argues that Democrats are making a mistake in not playing the blame game and placing the blame where it belongs:

Democrats would not be playing the blame game with one another for the loss or for the healthcare debacle if they had only pointed fingers at those (or in this case, the one) who put Americans (and most of the world) in the predicament we’re in: George W. Bush.

It is under his disastrous tenure in the White House that health insurance premiums nearly doubled for the average American family and the number of uninsured skyrocketed. It was under Mr Bush that the deficit spiralled out of control as we fought an unnecessary and endless $3,000bn war in Iraq and enacted the largest unfunded entitlement programme in history with the Medicare prescription drug benefit. It was Mr Bush’s economic team that worshipped at the Church of Deregulation and was asleep at the wheel as banks and insurance companies became too big to fail.

Carville complains that Obama “admirably and eloquently argued that the US was ready to turn the page on the Bush years.” While he might be right that Obama has gone too far in trying to turn the page, such political charges are better made by people other than the president.

I’ve expressed reservations about Michael Moore’s upcoming movie on capitalism. My bet is that Moore will have come correct points about failures of capitalism as practiced which led to the financial crisis but he will also stick to his usual political views and fail to appreciate the many benefits of capitalism. The movie will also be attacked from the right–often by people who will stick to their longstanding views that treat capitalism more as a religion and fail to acknowledge any problems.

John Stossel argues that Michael Moore Gets It Wrong. He falls back on quoting Reason which can be counted on to always cherry pick the facts to show that any problem is always caused by government intervention.

I have little use for those on the left or right who have a knee jerk reaction of defending their long-standing beliefs in such manners while ignoring any facts which show a need to revise their views. Rather than listening to either Moore or Stossel there are some other people I’d recommend here–all conservative or libertarian writers. I’m not saying they are always right, but I respect them for showing a willingness to revise their beliefs based upon the evidence. Such willingness to consider revise one’s views based upon the facts and changing situations also displays an essential component of true liberal thought.

Richard Posner, a long time supporter of the Chicago School, responded to the economic crisis by writing an excellent book, Capitalism in Crisis, which argues that the deregulation of the financial sector he previously supported did contribute to the crisis.

Bruce Bartlett, a former adviser to Ronald Reagan, has written The Next Economics which argues that:

economic theories that may be perfectly valid at one moment in time under one set of circumstances tend to lose validity over time because they are misapplied under different circumstances. Bartlett makes a compelling, historically-based case for large tax increases, once anathema to him and his economic allies.

Stossel argues about this quotation:

The wealthy, at some point, decided they didn’t have enough wealth. They wanted more — a lot more. So they systematically set about to fleece the American people out of their hard-earned money.

On one level Stossel is right that this sounds ridiculous. Most people strive do obtain more wealth and you cannot fault the wealthy on this alone. Ultimately Stossel is the one who is ridiculous in stressing the wrong points and instead I would suggest the works of former Republican strategist Kevin Phillips. His books in recent years have shown where the Republicans have gone wrong, including how they have used government to transfer the wealth (and fleece the American people out of their hard-earned money).

The transfer of wealth which Phillips writes about is from the middle class to the ultra-wealthy. Such actions by Republicans could be used as an example by libertarians of a problem caused by government, but in this case many libertarians back the Republicans on economics and are blind to this. Of course there are exceptions, such as Will Wilkinson who has written, “the great success of the GOP over the last eight years has been to destroy the reputation of free markets and limited government by deploying its rhetoric and then doing the opposite.”

Politico is talking about the possibility of a Republican comeback, starting out with reasons why it sounds far-fetched:

For the first time since their 2006 election drubbing, top Republicans see signs — however faint — of a political resurgence over the next year.

At first blush, this sounds absurd. After all, polls show the GOP more unpopular than ever, and the John Ensign sex scandal serves as a vivid, real-time reminder of why many see the party as a collection of hypocrites.

But several trends suggest this optimism might not be as far-fetched as it seems.

Polls show that the GOP is wise to focus most of its attacks on spending, government intervention and job losses. (Those same polls show the public has low regard for Republicans on these issues, but it’s a significant development that President Barack Obama’s numbers are slipping in these areas, too.) And just as importantly, GOP leaders on Capitol Hill privately recognize the need to distance themselves a bit from George W. Bush, Dick Cheney, Sarah Palin and Newt Gingrich — even though they’ve done poor job of doing so thus far.

They think the Republicans have a chance if they concentrate on government spending:

Polls show that Obama’s chief vulnerability is public concern over the soaring deficit. And as the sticker shock of a trillion-dollar-plus health care plan takes hold, these concerns are only likely to grow.

Rep. Mark Kirk (R-Ill.) — long used to hearing complaints about Bush — says his moderate constituents have finally found something else to gripe about. “Now the dominant thing I hear from them is: ‘What is all this government spending?'” said Kirk, who is mulling a Senate run next year.

Squabbling over much else, Republicans are emboldened and united on this issue. In the House, they banded together last week to oppose a supplemental war funding bill because it included $5 billion for the International Monetary Fund — what one GOP member called a “global bailout.” They are gearing up to oppose Democratic plans to increase domestic spending this summer and fall.

Yes, this approach is more than a tad hypocritical. Under Bush, Republicans vastly expanded the size of government and whacked Democrats when they opposed war funding. But memories fade fast in politics, especially in this era of turbo-charged media.

The key difference is that while both parties support big government, the Republicans support a government with less limitations on its power and increased interference in the lives of individuals. In order for the Republicans to try to win on the economy and government spending they have to hope that the voters forget everything else the Republicans stand for.

Even if they do manage to make the next election a referendum on the economy, the Republicans are hardly in good shape. They have to hope that voters have a very short memory and forget that the current economic crisis began under the Republicans and that Republican policies were a major factor in precipitating the crisis. Even long-time economic conservatives such as Richard Posner have acknowledged the problems which were created by deregulation of the financial industry.

You never know for certain how people will vote, and it is possible voters have a short memory. A present polls only show about 20% still supporting the Republicans, with virtually all groups now opposing them. The off-year elections in 2010 should offer advantages for the party out of power, especially as many Democrats are now defending traditionally Republican districts. It is still risky for the Republicans to count on the economy and government spending as issues. Numerous polls have showed public support for health care reform even if it costs more and results in higher taxes.

In general voters will vote Democratic when the economy is their main concern–which certainly makes sense considering the overall track record of the two parties. As they regularly ignore facts when they contradict their ideology and they stick to economic principles which simply do not work, an economic decline seem to be an inevitable consequence of Republican government. A majority of voters seems to feel this way.

Looking back at the 2008 presidential race, John McCain led in the polls after the conventions. I still felt confident that Obama would win, especially as McCain was riding a bounce due to interest in Sarah Palin which I though would eventually back fire against him. While confident that Obama would pull back ahead, it was not until the financial crisis began that Obama took a lead and was never in danger of losing the election. Voters who rejected the Republicans due to the economy in 2008 might be convinced to return, but it will be a very hard sell.

While Obama may or may not be right on individual decisions, a pragmatic president who will change course based upon facts is far preferable to Republicans who govern based upon blind devotion to ideology and deride a necessary change in policy as “flip-flopping.” The problem the Republicans face is that, while the Democrats are far from perfect, most voters feel the Republicans are far worse.

The Economist has interviewed Richard Posner. Posner has attracted my attention (and the attention of many others) for being economically conservative out of the Chicago School but acknowledging that deregulation has gone too far and is partly responsible for the current economic crisis. Posner has also been very critical of the anti-intellectualism of the Republican Party. He sees the country moving to the left under Obama as leaving room for a more rational Republican agenda which can move back from the extreme right:

DIA:In writing about the intellectual decline of conservatism you say that the movement has “so far succeeded in shifting the centre of American politics and social thought that it can rest, for at least a little while, on its laurels.” Are you at all afraid that, while conservatives rest, Barack Obama will have shifted the centre of American politics back to the left?

Mr Posner: That may happen, but if so it will be good for conservatism! President Clinton in effect co-opted the conservative agenda; I have often referred to him as the consolidator of the Reagan revolution. His economic policies were conservative, but he also supported capital punishment and welfare reform, though obviously the control of Congress by the Republicans was a big factor in the latter. His judicial appointments were generally of moderates, and the two liberals whom he appointed to the Supreme Court were less liberal than the justices they replaced. If the current administration moves the country left, conservatives will be able to campaign from a position of responsible conservatism, rather than pushing a conservative agenda beyond reasonable bounds in order to differentiate conservatism from the centrist policies of moderate Democrats.

Posner considers Obama’s handling of the economic crisis to be a mixed bag, giving him far more credibility than conservatives who attack all aspects of Obama’s actions without being able to offer any reasonable alternatives of their own:

DIA:What do you think of the Obama administration’s handling of the crisis?

Mr Posner: A mixed bag, but given political constraints and the inherent awkwardness of a presidential transition in the midst of a crisis, probably as well as could be expected. I think we needed the Keynesian stimulus (the $787 billion in tax cuts, benefits increases, and public works), although it could have been better designed; and the stress tests, a distant cousin of FDR’s bank holiday (during which bank examiners examined the books of the banks and allowed only those adjudged solvent to reopen), apparently have assisted the major banks to obtain additional capital. Above all, Mr Obama has radiated confidence, competence, and control, and those are important qualities in a president who is trying to allay public anxieties. For those anxieties stimulate hoarding (by banks as well as by individuals), which reduces spending, which reduces production, which increases unemployment, which reduces incomes, which reduces spending further—the downward spiral that it is imperative to arrest. But the harassment of business over compensation policies, and the impending federal takeover of General Motors, are negatives: they increase the uncertainty of the business environment, which dampens the incentive to invest, and shift the balance between government and business in the management of economic activity too far in favour of the government.

Posner also refers to the opposition by conservatives to closing Guantanamo Bay and moving prisoners to federal prisons in the United States to be an example of “idiot conservatism.” Posner also does not go along with the conservative outrage over considering empathy in a Supreme Court nominee:

I think empathy, which means the ability to understand how other people feel, is a valid and important attribute of a judge, because his decisions affect people, often profoundly, including people who are not before the court, and he should have a sense of how they will be affected by and react to the decision, and of the motivations and circumstances that led them to act as they did in whatever dispute or incident led up to the case.

Libertarian views of Barack Obama have varied widely, largely because the wide variety of people who use this label. I noted during the election that many libertarians were backing Obama, while other libertarians echo the view of him from the far right. David Boez takes a pretty optimistic view of the direction we are heading. He see a positive trend for civil liberties, and discusses issues such as legalization of marijuana and same-sex marriage in depth. He concludes:

The “shift to the left” that we seem to observe on economic policy is depressing to libertarians. But that’s mostly crisis-driven. When the results of more spending, more taxes, more regulation, and more money creation begin to be visible, we may see the kind of reaction that led to Proposition 13 and the election of Ronald Reagan at the end of the 1970s. Meanwhile, this cultural “shift to the left” is far more encouraging. And don’t forget, at 90 days into the Obama administration, Americans preferred smaller government to “more active government” by 66 to 25 percent.

Boez is also taking a far more realistic viewpoint than is coming from many economic conservatives in realizing that current economic policy is in response to a crisis and does not reflect the overall direction the country is heading in. On the other hand, the crisis has ensured that opposing all regulation will not be taken very seriously as it was during the Reagan years. We now even have supporters of the Chicago School such as Richard Posner (author of Capitalism in Crisis) arguing that deregulation of the banking industry went too far.

The apparent contradiction between supporting smaller government and supporting the actions of the Obama administration has other possible explanations beyond response to a crisis. This is partially due to the difference between small government and limited government. When many libertarians and conservatives talk of small government they are literally talking of the size of government. They are looking at how much money the government spends, how many people it employees, how many rules are on the books, and how many government agencies we have.

For many other people the important issue is not the actual size but how government impacts upon their lives. To many voters a liberal version of limited government is far preferable to conservative small government which is more intrusive in our lives. Many people do not see a government, regardless of size, which restricts civil liberties, interferes with reproductive rights, criminalizes marijuana, intervenes in marriage decisions, intervenes in end of life decisions, and embraces the social policies of the religious right as being small at all.

Even when considering the types of issues conservatives are more likely to consider when speaking of small government, the views of many voters are not entirely clear. People will say in general they want small government, but are also unwilling to give up many of the services provided by government. Most voters do not want to give up Medicare or Social Security and most voters recognize a need for changes in our health care system, even if it results in higher taxes.

Some of the statements of support for small government come from listening to the rhetoric of the right. We constantly hear that there are government programs which spend lots of money, employ lots of people, and do nothing for us in return. Naturally everyone will agree that we should get rid of such government programs. Now we just have to find them. While there is certainly some waste which can be eliminated, it is doubtful that any truly wasteful programs which can be identified will amount to a very large percentage of the actual size of government.

Libertarians need to decide what really matters. If the actual number of government employees and government agencies is the key issue in their lives they are not going to be happy with the direction the country is going in. However, if they look at the fundamental questions of whether people are becoming more or less free in running their own lives, and free from interference from government, then Boez is right that there are real reasons for optimism.

John McCain plans to launch a new series of smears against Barack Obama this week based upon distorted accounts of association with others. This is a rather desperate move on McCain’s part considering both his own history and the extremists Sarah Palin has associated with. While Obama would prefer to stick with discussion of the issues, he cannot ignore the lessons of the Swift Boat Liars and other Republican smears of the recent past. If McCain wants to make the campaign about the past, it is time to take a closer look at John McCain’s past.

At noon on Monday, Obama’s campaign will be releasing a thirteen minute documentary on John McCain’s role in the Keating 5 scandal entitled Keating Economics: John McCain and the Making of a Financial Crisis. The point of the documentary is to show that John McCain “still hasn’t learned his lesson,” and “this time, McCain’s bankrupt economic philosophy has put our economy at the brink of collapse and put millions of Americans at risk of losing their homes.”

A preview of the documentary is above. The full video will be available after noon at keatingeconomics.com. Background information is currently available, including this information:

During S&L Crisis, 747 Savings & Loans Banks Failed, Costing US Taxpayers $124 Billion; Deregulation Allowed Riskier Investments By S&Ls, Leading To Widespread Collapses And Fraud. In the 1980’s and early 1990’s the US economy was badly shaken by the failure of 747 savings and loan (S&L) institutions that had to be taken over and bailed out by the federal government. In total, the failures cost taxpayers $124 billion. One of the main causes for the epidemic of failures was the unregulated expansion of S&L’s, which had traditionally only dealt with home loans, into more exotic and riskier investments. When many of those investments failed, the institutions collapsed. [Chicago Tribune, 7/3/98, Los Angeles Times, 9/17/08]

S&L’s Risky Investments With Federally-Insured Money Led To Call For More Regulation. In the early 1980’s, Charles Keating’s American Continental Corporation purchased a California S&L named Lincoln. At that time, S&Ls like Lincoln were able to go beyond their traditional purpose of offering home loans and engage in riskier forms of investment. Since the deposits of S&Ls were insured by the federal government, regulators began to take notice of the investments being made by Keating and at other S&Ls. The Federal Home Loan Band Board (FHLLB), which had regulatory authority over the S&Ls, began to worry about the risks of this trend, and proposed a “direct investment” regulation to limit the money S&Ls could direct to these riskier investments. [Senate Ethics Committee Keating Five Investigation, 1990]

At Keating’s Request, McCain Wrote 5 Letters, Supported Bill To Forestall Direct Investment Rule. Keating was unhappy with the direct investment rule and began actively lobbying against it. Senate Ethics Committee Special Counsel Robert Bennett explained during the 1990 Keating Five hearings that John McCain wrote at least five letters to regulators, Treasury and White House officials to argue against these proposed restrictions on risky investments by S&Ls. Bennett said that “In 1984 and ‘85, then Congressman McCain wrote several letters to Chairman [Edwin] Gray [of the Federal Home Loan Bank Board] and White House officials urging them to postpone promulgation of the direct investment ruleâ€¦ There is evidence that Senator McCain did so at the urging of Mr. Keating or other representatives of Lincoln.” McCain’s work for Keating also included signing onto a bill to delay the direct investment rule in 1984 [Senate Ethics Committee Keating Five Investigation, 1990; HCONRES 363, 98th Congress]

With New Regulations In Place, Officials Began Investigation That Found That Keating’s Lincoln S&L Had Operated As Massive Fraud. After the direct investment rule was enacted the Federal Home Loan Bank Board began a more vigorous investigation into Lincoln’s practices, beginning to uncover a vast web of fraud and accounting irregularities designed to embezzle money to Keating and his family and friends. Top regulator William Black later said that Lincoln “operated like a Ponzi scheme, or financial pyramid dependent on an ever-increasing churning of assets.” Black said, “Its parent, Keating’s American Continental Corp., was no more than a shell that siphoned dividends from Lincoln and distributed them through inflated salaries to Keating, his family members and associates.” [Senate Ethics Committee Keating Five Investigation, 1990; Associated Press, 12/5/90]

Keating Asked McCain And Other Senators To Whom He Had Contributed To Intervene With Regulators. In the most well-known episode of the scandal, Charles Keating asked five U.S. Senators including McCain to intervene with regulators from the Federal Home Loan Bank Board on his behalf. The Senators attended two meetings with the regulators in 1987. Reports of the meetings and the fact that Keating had contributed heavily to those Senators led to an investigation by the Senate Ethics Committee in 1990 into what became known as Keating Five scandal. [Senate Ethics Committee Keating Five Investigation, 1990; Chicago Tribune, 6/14/90; Los Angeles Times, 5/30/89]

Keating Admitted He Was Trying To Buy Influence. Keating was asked if his contributions bought him influence with the Senators, to which Keating replied, “I want to say in the most forceful way I can, I certainly hope so.” [Los Angeles Times, 5/30/89]

Ethics Committee Special Counsel Said McCain Had Closest Relationship to Keating. Robert Bennett, the Special Counsel for the Senate Ethics Committee said during the 1990 hearings: “of the five senators here before you, Senator McCain had the closest personal friendship with Charles Keating. Their friendship predated Senator McCain’s political career. Senator McCain also was the only one who received personal as well political benefits from Charles Keating.” [Senate Ethics Committee Hearing into the Keating Five]

McCain Received $166,000 In Campaign Contributions from Charles Keating and his Associates. “Together with friends and associates, Keating contributed $56,000 to McCain’s first House race, another $56,000 to the second and $54,000 to his 1986 Senate campaign,” contributions that were key to early success as a politician. [New York Times, 5/25/97]

McCain Used Keating’s Private Planes on Nine Occasions. “From August 1984 to August 1986, Sen. John McCain and his family flew across the country and to the Bahamas on at least nine occasions at Charles H Keating Jr.’s expense,” often to stay at the Keatings’ exclusive Cat Cay getaway. [Arizona Republic, 10/8/89]

McCain Had Direct Financial Ties To Keating. Keating brought in McCain’s wife and father-in-law as the largest investors in an Arizona shopping center investment. Fountain Square Shopping Center was a no-risk investment that virtually guaranteed a 25% return and a “significant tax write-off” through a tax shelter technique available to the wealthy that was soon outlawed. When reporters first questioned the deal, McCain said to reporters “It’s up to you to find that out, kids.” [Arizona Republic, 10/8/89]

McCain Originally Denied Reports of Connection. “When the story broke, McCain did nothing to help himself. ‘You’re a liar,’ McCain said” when asked about the investments. He challenged reporters saying, ‘It’s up to you to find that out, kids.’” [Arizona Republic, 3/1/2007]

Keating’s S&L Was Declared Insolvent; $3.4 Billion Bailout Most Expensive in Meltdown. Federal regulators declared Lincoln Savings and Loan insolvent. It ended up costing taxpayers $3.4 billion to clean up the mess and cover federally-insured deposits at Lincoln, making it the most expensive failure in the entire S&L meltdown. [Washington Post, 11/29/92; New York Times, 2/21/08]

Keating Also Bilked 23,000 Investors – Many Elderly – With Junk Bonds. As his deeds unraveled under the scrutiny of regulators and civil and criminal court cases, it became clear that he had sold worthless junk bonds to 23,000 investors, many of them elderly retirees who had thought their investments were insured and lost their lost savings to Keating’s crimes. [Associated Press, 2/23/08]

Keating Was Found Guilty of 73 Counts of Fraud, Lost Two Criminal And One Civil Case. “a federal jury convicted him of 73 counts of wire and bankruptcy fraud in the collapse of American Continental and Lincoln,” a keystone of the Savings & Loan scandal as Keating “looted” the bank. Keating was also found guilty in civil court and lost a massive class action suit by investors he bilked. [Arizona Republic, 3/1/2007; Associated Press, 4/7/99]

The Commmonwealth Fund has compared the health care plans of Barack Obama and John McCain and found that Obama’s plan would do far more to provide health care coverage to the uninsured. They made comparisons of the costs of the two plans. I find it interesting that, although it accomplishes far less, the cost of McCain’s proposals are far closer to the cost of Obama’s than I would have guessed. Surprisingly, McCain’s plan would initially cost far more than Obama’s plan while covering 17 million fewer people as most of the tax credits in McCain’s plan would be used by people who currently have private health insurance:

If implemented in 2009, McCain’s proposal is estimated to reduce the number of people who are uninsured by 1.3 million at a cost of $185 billion, though this does not include the effects of high-risk pools. About 20 million people would lose employer coverage under the McCain proposal, and 21 million would gain coverage in the individual market. Obama’s plan is estimated to reduce the number of uninsured people by 18.4 million in 2009 at a cost of $86 billion.

In the first year, McCain’s plan is estimated to cost more than twice as much as Obama’s while covering 17 million fewer people because most of McCain’s tax credits would likely be used by people who already have private health insurance.

By 2018, McCain’s plan is estimated to reduce the number of uninsured by just 2 million out of projected 66.8 million uninsured at a cost of $64 billion. Obama’s plan is estimated to reduce the number of uninsured by 33.9 million in that year at a cost of $237 billion.

Over the 10-year period, the Center estimates that the total federal cost of McCain’s plan could reach $1.3 trillion and the cost of Obama’s plan could reach $1.6 trillion.

McCain’s proposal is estimated to cover fewer people in future years and cost less over time because the tax credits would grow at the rate of consumer prices, which have historically grown more slowly than medical expenditures. This means that, over time, the value of the tax credits is expected to decline relative to premium costs. This has two implications: 1) fewer people would be able to afford to buy health insurance with their tax credits and 2) people with employer coverage will pay more taxes on employer-provided premium contributions, thus offsetting the federal government’s cost of the tax credits over time.

The Center estimates that McCain’s high-risk pool proposal, if adequately financed, could add another $1 trillion to the cost of his plan over 10 years. This feature is likely to be expensive for two reasons: 1) allowing people to buy coverage across state lines would remove existing consumer protections in some states, leading many people who currently have coverage through those markets to the high-risk pools and 2) many people with health problems who lose employer-based coverage under McCain’s proposal would seek coverage in high-risk pools.

After considering these measures of cost and number insured they look at additional features and expressed a view of the plans with regards to which proposal holds the greatest promise:

Measured against these broad principles, Obama’s proposal for mixed private–public group insurance with a shared responsibility for financing has greater potential to move the health care system toward high performance than does McCain’s proposal to encourage individual market coverage through the use of tax incentives and deregulation (Figure ES-4). Compared with McCain’s approach, Obama’s approach could provide more people with affordable health insurance that covers essential services, achieve greater equity in access to care, realize efficiencies and cost savings in the provision of coverage and delivery of care, and redirect incentives to improve quality. In the absence of a requirement that everyone has affordable coverage, however, the proposal is likely to fall short of achieving universal coverage.